“There are many studies that show companies and funds that score well on these issues also have better profits,’‘ AMP head of investment strategy and chief economist Shane Oliver says.

“Companies that employ responsible investing, including environment, social and governance issues, are meeting higher standards and producing higher returns for investors,” he says.

Companies such as AMP are quick to react to their investors ethical sentiment.

In May, AMP Capital revealed plans for its responsible investment funds to limit ­exposure to the oil and gas industry, citing “growing interest and concern” about climate change from investors.

News_Image_File: In May, AMP announced yesterday that its responsible investment funds would dump certain fossil fuel companies such as coal miner Whitehaven.

CONSCIOUS CAPITALISTS CASH IN

Superannuation research company SuperRatings agrees that ethical and sustainable funds often outperform market averages.

Its annual analysis of super funds found that those with responsible investment standards outperformed the average balanced fund in the three main performance periods of one, three and five years.

Sustainable share funds also outperformed standard Australian shares during the same periods by almost 2 per cent in some cases, SuperRatings research manager Kirby Rappell says.

“Overall we would say ethics and profits can be combined and generally we would suggest most funds are slowly moving along the path of making their investing more sustainable,’’ Rappell says.

Specialist fund manager Australian Ethical says there is $153 billion currently managed in responsible investment portfolios throughout Australia, representing about 16 per cent of all assets under management.

“Since the global financial crisis and the washout of corporate greed and dubious practices, the investing public has become more and more interested in ethical investments and less trusting of corporations,’’ Gillham says.

“The GFC provided the public with a very real and stark reminder that ‘profit at all cost’ means that someone loses.

“Can ethics and profits mix? Absolutely. However, it will only be wide spread if the investing public continue to develop a bigger and louder voice by demanding it — or putting their money where their mouth is.”

AMP’s Shane Oliver says investors are increasingly demanding more options that involve responsible investing, and this is leading to more fund managers adjusting their assets and portfolios to ensure they meet the demand.

In Australia, however, he says the demand has been slower than in Europe and the US. International investors have been quicker to realise that companies with reduced exposure to things like unethical practices, pollution, war and environmental hazards also reduce the risk to a company’s profits, Oliver says.